Low-Risk Investors: Why IAG Stock Could Be Your Best Bet Yet!

IAG (TSX:IAG) stock operates in a stable sector, with a strong dividend and returns. And there are even more reasons to consider the low-risk stock.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

When it comes to new investors, many want to run into investing like it’s a race. But investing is far more like a marathon. You want to find long-term holds that can provide you with long-term income through dividends and returns. And that can mean finding low-risk options to start off with.

However, low-risk investors face the exact opposite problem. They might be more wary of the market and miss out on opportunities because of it. This can hurt you in the long run, as you won’t invest as much, and this can lead you to lower overall portfolios for your retirement and other investment goals.

This is why we’re going to look at the best of both worlds with iA Financial (TSX:IAG): an insurance company that can be the best for low-risk investors wanting more.

What makes a stock low risk?

As you start considering a low-risk stock, you’ll want to look to a few keys in order to discover whether that company can provide you with low-risk growth but growth nonetheless. So, let’s go over some of the key factors influencing your decision.

First, is the industry in which the stock trades stable? If it’s an essential area, this could mean it’s lower risk compared to other higher-risk industries like tech. Then there’s the company’s overall financial health and whether earnings grow steadily over time with strong fundamentals.

From there, look at the company’s market position relative to competitors and the regulatory environment in which it operates. Furthermore, how might the company be influenced by global economic fluctuations? 

Finally, look at the stock’s dividend history and volatility to determine how it might react under any stressful market scenario. In this case, let’s see how IAG stock stacks up.

Considering IAG stock

IAG stock trades within the stable insurance industry, as people and businesses require insurance coverage regardless of economic conditions. It also provides financial services, including asset management, wealth management, and banking. These are also essential sectors for both individuals and businesses.

Furthermore, IAG stock is one of the largest insurance and wealth management companies in Canada. Offering a wide range of products, it has grown to hold a strong position in Canada and continues to expand its offerings. However, it’s mainly focused in Canada, which could leave the door open for more growth elsewhere. Meanwhile, it does see more influence from a low-performing Canadian economy.

In terms of volatility and its financial position, IAG stock continues to perform well. It offers a 3.88% dividend yield while trading at 10.99 times earnings. Its return on equity is at 11.14%, which is around the average of the TSX 60. There’s very little debt on hand, and it holds a steady 39.71% dividend payout ratio.

Bottom line

With a strong dividend yield, stable earnings growth, and stable returns over the last several years, IAG stock looks like a great investment for low-risk investors. If you want to see more growth but lower risk, it’s certainly one to consider on the TSX today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Dice engraved with the words buy and sell
Stocks for Beginners

TD Stock: Buy, Sell, or Hold?

TD stock (TSX:TD) is under immense scrutiny during its money laundering probe, but this could also mean it is a…

Read more »

Different industries to invest in
Tech Stocks

Why This AI Stock Surged 363% in Just 1 Year

This AI stock has surged this year by almost 400%! And yet this could only be the beginning for this…

Read more »

Various Canadian dollars in gray pants pocket
Tech Stocks

3 No-Brainer Stocks to Buy With $50 Right Now

Looking for high growth? Dividends? How about just a huge portfolio? We've got it all with these three top stocks…

Read more »

woman analyze data
Stocks for Beginners

Best Stocks to Buy in May 2024: TSX Consumer Discretionary Sector

Here are two of the best TSX stocks from the consumer discretionary sector you can buy today and hold for…

Read more »

Profit dial turned up to maximum
Dividend Stocks

This 7% Dividend Stock on the TSX is Worth Watching

With this superb TSX stock now trading at the bottom of its 52-week range, it's certainly a dividend stock you'll…

Read more »

bulb idea thinking
Energy Stocks

This Stock Is Miles Ahead of Its Industry: Is It a Buy Now?

This stock has proven to be well worth the investment, especially at a time with increasing demand for clean energy…

Read more »

edit Colleagues chat over ketchup chips
Stocks for Beginners

3 Reasons NFI Stock Looks Like a Screaming Buy

NFI (TSX:NFI) stock has seen shares rise higher and higher, most recently after first-quarter earnings that saw its backlog swell.

Read more »

Bad apple with good apples
Dividend Stocks

Safe and Sound Stocks for Canadians: My Top 5 Choices

Want some of the best stocks for Canadians right now? Here's my top 5 list of stocks to buy today…

Read more »